Phone call monitoring: Are you breaking the law?

A growing number of states require two-party consent to any monitoring or recording of business phone calls. And, if a recent court case is any guide, those states are ready to punish businesses that violate the rules … even if the calls originate in a different state.

The case: Two brokerage-firm clients who lived in California often spoke via phone with their stockbrokers in Atlanta. But after a dispute led the two clients to file fraud claims against the brokerage firm, they discovered that their phone calls had been recorded.

They sued again and won, alleging violations of California privacy laws that mandate a higher level of call-monitoring consent. (Kearney v. Salomon Smith Barney, No. S124739, CA, 2006)

The case pitted two states’ competing laws over a tricky question: When a call is placed from one state to another, which state’s law on telephone recording applies?

The issue arose because Georgia law permits recording with the consent of only one party, while California law requires two-party consent.

The California Supreme Court ruled that the law from the state in which the call is received—not the one in which it originated—should prevail.

Employment attorneys say that this court’s reasoning will resonate in other states, as they increasingly seek to protect individuals’ privacy interests over those of businesses.

In fact, the court in this case warned that “out-of-state companies that do business in California now are on notice with regard to future conduct,” essentially promising sanctions if they secretly record calls to or from the state.

Bottom line: Any employer that conducts phone business with contacts in California and the other 11 dual-consent states should re-examine its policies for monitoring and recording the calls.

Obviously, employers have many bona fide reasons for monitoring or recording employees’ phone conversations: to ensure service quality, help train new employees, detect misuse of company phones or prevent disclosure of confidential information, to name a few.

Steps to compliance

Before you monitor or record employees’ calls, make sure you’re familiar with the state laws governing such call monitoring … and take these steps to make sure you comply:

1. Say it up front. Give notice with an announcement at the beginning of incoming calls that notifies third parties of your monitoring policy and its purpose. Examples: training purposes or quality assurance.
2. Seek consent. If some of your company’s calls are to a two-party consent state (see box below), you have two choices: Either avoid monitoring and recording calls that originate or terminate in such states, or precede the conversation with the notice that the conversation may be recorded. Your customer’s decision to continue with a call after hearing your recording amounts to prior consent.
3. Repeat it. Instruct employees to recite a similar acknowledgment of call monitoring and customer consent when making outbound calls to third parties. Tip: Attach stickers to business phones to remind employees to take this step.
4. Add a beep. Consider adopting a tone audible throughout a call as an indicator that the conversation is being monitored or recorded.  

States that require dual consent for monitoring phone calls